Your Weaknesses Could Be Your Moat
Michael Girdley cites the example of Spirit Halloween, which operates for only six to eight weeks a year but has turned apparent constraints into hidden advantages.
Good Morning!
Here are today’s highlights:
President Trump says he’s cut trade deals with several Southeast Asian countries.
The typical “Shark Tank” company is having a tough time with the tariffs.
The Wall Street Journal’s editorial board suspects that President Trump fears he will lose his tariff case in the Supreme Court.
Even the oil and gas industry thinks the EPA may be going too far in reducing regulations.
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Michael Girdley says there could be a business advantage hidden in your constraints: “In 1983, a guy saw a costume shop with a line out the door, open just one month a year. He took that idea and ran with it. Today, they operate 1,500+ locations and sell one out of every six Halloween costumes in America. Crazy! But they couldn’t have gotten there by trying to be an ‘everything store.’ Their extreme focus gave them a structural advantage that bigger, better-funded competitors couldn’t match.”
“Spirit Halloween only operates six to eight weeks per year. That constraint meant they needed to hone a special set of skills: Negotiating ultra-short-term leases (3 months or less). Sourcing inventory in massive quantities (orders of 15,000+ units). Hiring & training thousands of seasonal staff. Creating theatrical in-store experiences that change annually.”
“Spirit is purpose-built from the ground up. Ten thousand square feet of Halloween. Wall-to-wall selection. Twenty-five types of fake blood. Compare that to Party City, which tried to own every holiday year-round. They had to carry inventory for birthdays, anniversaries, Christmas, New Year’s. (And now they’re bankrupt.)”
“I actually ran a few Halloween stores in the early 2000s. I had to get my stock from a warehouse in Kansas. But since Spirit could bulk order for hundreds of stores, they went straight to the manufacturers and paid 30-40 percent less. I never stood a chance, price-wise.”
“The question for your business: What gets dramatically cheaper at scale? Maybe it’s fake blood. Perhaps it’s marketing spend. Technology. Shipping rates. Calculate your unlock number. Then get there deliberately. It could be opening more locations. Or it could be focusing on fewer SKUs to increase volume per item.” READ MORE
